Abstract
This study considers five regions, i.e., South Asia, South-East Asia, China, Middle Eastern countries, and European countries, and took their data for 15 years. This study makes a significant contribution to the literature by examining the impact of green finance on environmental sustainability. Green finance development is represented by GDP, investment in renewable energy sources, investment in research and development (R & D) for eco-friendly projects, and public-private partnership investment in renewable energy projects. Green financing development in the chosen panel exhibits a distinct geographical cluster effect, with significant regional variances. The most important influencing elements are regional GDP, regional innovation level, and air quality, whereas the degree of financial development and industrial structure optimization are insignificant. The degree of financial development and industrial structure optimization are related to the amount of green finance development mostly via spillover effects. The degree of financial development has a positive spillover impact, but industrial structure optimization has a negative spillover effect. This study reveals that an increase in the production of energy from renewable sources, an increase in R & D, and the evolution of public-private partnership investment in renewable energy reduce CO2 emissions. It is evidenced that green finance in renewable energy sources is necessary to achieve environmental sustainability. There is a strong need to increase green finance in renewable sources to target the minimization of global CO2 emissions. There should be cross-border trade of renewable energy between regions/countries to mitigate CO2 emissions globally. Moreover, this study ranks the regions based on environmental sustainability, which may help researchers and decision-makers to entice foreign direct and private investment in these regions. The implications of the findings of the study suggest that environmental sustainability benefits greatly from green financing and investing in renewable energy sources through public-private partnerships, which represents one of the best ways to ensure environmental sustainability.